But the sector that has for years been hindered by the country’s politics is still subject to internal struggles between the central government and the provincial governments, corruption, and the lack of an infrastructure that is able to accommodate its growth.

The table below details the growth in the production of crude oil in Iraq since 2007. The capacities of refineries and local oil consumption have also exhibited a steady increase. The information retrieved from the latest annual report by the Organization of Arab Petroleum Exporting Countries (oapecorg.org) is presented below.

*Numbers are in thousands of barrels/day

After years of sanctions and the US invasion that followed, the oil sector finally began to flourish in 2009. With an almost complete destruction of the private sector during the war years, oil came as the first resort that would restore the economy. In 2011, it accounted for as much as two-thirds of Iraq’s GDP. 90% of the government’s revenues is a product of the oil sector. This has made way for increased spending on infrastructure and development projects. Apart from the reconstruction of a war-torn country, this is critical for further expanding the oil industry. The revenues made from oil production are then generated into infrastructure, which in turn allows for more growth in the oil sector.

However, being that Iraq is at a juncture of state consolidation after years of a power vacuum, corruption remains rampant. This is exemplified in exaggerated salaries for public employees, cronyism, and delays in bureaucratic procedures and legislation. Should this prevail it is expected to slow down infrastructure development and therefore inhibit the thriving oil sector. Officials trying to keep the government employee salaries as is have hindered their legislation for regulation for months. Moreover, the fragile state of the federal government has kept it from any agreement on a national oil law.

The differences between Nouri el Maliki’s central government and the aspirations of regional governments were most recently demonstrated when the autonomous Kurdish region began exporting oil to Turkey. The central government responded by prohibiting the exportation of oil resources by regional governments without acquiring consent from Baghdad first. The reason for the government’s reaction is the absence of an agreement over the division of profits made from exporting oil. Prime Minister Maliki has expressed concerns over how the oil policies of the Kurdish region can inspire an inclination towards greater autonomy in other provinces of the country as well.

The government’s attempt to exert its authority over the oil sector comes at a time when the federal system remains fractured. The Ministry of Oil has announced that it will confiscate any oil or gas taken out of the country without its permission. This is likely to increase already existing tensions between the federal government and regional governments. Thus the oil industry also becomes a factor of destabilization. Until a nationwide law that governs its use is reached, oil will continue to play both a critical role in the development of post-war Iraq. Not only will it contribute to economic growth, but also to the formation of this new political settlement.